April 15th: Irish Property Market News & Development Updates

Below is a catch-up on the stories that caught my attention earlier in the week, together with some of the industry stories from across the broadsheets today. As always, you might let me know if I have missed out on any relevant property news by emailing carol@caroltallon.com.

(Apologies in advance for any typos, it’s difficult to get good help on a Sunday!)

Sunday Read – Data Centres

Irish Data Centres, An industry of Substance’ report was launched by Garry Connolly, Host in Ireland, earlier this week in DCU, Dublin. The most eye-opening statistic for me was hearing about the pipeline of work over the next few years and how that pipeline is gaining in certainty, speed and volume: https://lnkd.in/dFhEewq

Irish Times article:

‘Data centre investment in Ireland to near €9bn by 2021: But sustainability of industry growth will depend on energy resources’

Trending Property Story

Last Tuesday, RTE reported that up to twenty hopeful house-hunters were queuing outside a showhouse in Dublin 15 days before a newly development scheme even launched for sale. This means that the would-be buyers did not know the price of the houses (expected range €300,000 to €500,000!).

The backlash to the estate agency online and in the media was pretty vicious, with many suggesting that it was a PR stunt. If so, it was a PR stunt gone wrong. It was clear that the would-be buyers had been grossly misinformed, with one Spanish man claiming that he was told this is the only way to buy property in Ireland. Other buyers reasoned that this was the only way to secure a fixed-price property i.e. with no bidding. It quickly became evident that the persistent lack of transparency and adversarial nature of bidding on second-hand homes is a huge problem for inexperienced home buyers. This is particularly frustrating given that technology exists and is readily available to solve this problem – it really begs the question as to why some estate agents are refusing to use it…

This story was covered across most of the media, here is a link to a discussion with Newtalk FM’s Ciara Kelly on Lunchtime Live last Wednesday where we talked about the ridiculousness of this and ways to prevent it happening again:

Philip Ryan writes the lead story in the Sunday Independent today and pulls no punches with the headline ‘Varadkar “too elitist and arrogant to fix housing crisis”’. Those words have also been used to describe current Minister for Housing Eoghan Murphy in quite a personal attack by FF’s Darragh O’Brien, accusing both of not understanding the realities of the housing crisis. The FF housing spokesman has also indicated that he will fight for the removal of the first-time buyers’ grant in favour of tax relief for all homeowners. If successful, this will come as a huge blow to the construction industry.

An opinion piece by Donal Lynch supposes that ‘High property prices ripping the heart out of our city: homes only for the rich will turn the capital into a bland consumer playground“. Of course, he has a point, but it is one that is hidden beneath derogatory stereotypes like “boring banker“, “tedious tech drone“, “corporate drones” and “wealthy frat kids“ – it’s not hugely helpful in a problem-solving context.

As always, there are commentators who wallow in the problem and there are those who promote likely solutions. At this stage we can only afford to entertain the problem-solvers, like Colm McCarthy on page 22 of the Independent today. He suggests that “current planning policy must be abandoned if we want to end the crisis of rocketing property prices and rents“. He goes on to say that in areas around the country, outside of Dublin, housing has reached affordable levels i.e. not exceeding €250,000. He goes on to say “if Dublin really was a huge city burdened with an absolute shortage of land for residential development the fatalism of policymakers would be understandable. But it is a pretty small city in reality, with a population in the city and county combined of just over 1.3 million.“ I think this is one of the most important points to keep in mind; the affordability of homes for sale or rent in the capital is not an unsolvable problem. Zoning more land around Dublin – the author suggests within 25km of the city- would be a practical start. High-rise apartments are an inevitable part of the solution. McCarthy believes that “current planning policy, starting with the 1963 Planning Act and its successors, should be abandoned”. This is a potentially bold yet simple solution and one that ought to be considered. As always, when it comes to planning issues we find the gatekeepers inevitably fall on the side of public sector rather than private, perhaps that is the first hurdle to overcome?

In the Sunday Business section of the Independent today Fearghal O’Connor writes that Quintain (Wembley Park developer, a Lone Star subsidiary) has been appointed to lead the design, planning and development of a new €200 million town centre for Adamstown, County Dublin which will include 1000 homes.

Ronald Quinlan for the same newspaper reports that “ The sale by Cairn Homes of its apartment development at Hanover Quay in Dublin’s Docklands is on course to secure over €100 million“, with Ires Reit, Hines and Kennedy Wilson thought to be bidding.

Very much on trend, property editor Fran Power has a feature on property renovations, including top tips and budget expectations from Fiona McPhillips.

The Sunday Times today reports that plans for 3,500 thousand homes in Dublin’s Poolbeg are in jeopardy following a dispute between the receiver and local authority. Apparently local councillors have threatened to withdraw support for the proposed development if the agreement to build 900 social and affordable homes is not honoured by Nama.

According to Brian Carey in The Sunday Times today, Investec Corporate Finance is apparently working on plans to bring Alanna Homes (Liam McGreal, connected with Seamus Ross/Menolly Homes) to the stock market, which would make it the fourth quoted house builder here.

Lorcan Sirr writes about an apartment block in Clondalkin, which was given permission for 27 apartments yet went on to develop 44 apartments. The developer last year unsuccessfully sought retention of the non-compliant development. The effect of this is that families housed there with the support of local authorities were given notice to quit after the local authority stopped paying rent. This raises many serious questions about how developments are regulated. It also shines a spotlight on massive inadequacies in the system – is emergency accommodation better or worse than non-compliant buildings in order to house families at a time of crisis? One of the straightforward solutions here is a return to local authority inspections, which the writer suggests would cost approximately €15 million per annum. Seems like a reasonable solution?

There are reports of “a major row brewing between the building industry and the country’s main environmental watchdog over proposals for new charges to be levied on construction waste” according to Fearghal O’Connor. The CIF maintains that proposed changes to waste-charging by the EPA will drive up construction costs. Both parties are meeting next month to discuss this.

In his column this week, Ronan Lyons talks about the report recently published by the Housing Agency comparing the cost of construction in Ireland with those in other European countries. He describes the costs of construction as “arguably the single biggest contributor to the housing supply crisis“. The report found that costs in Ireland are similar to those in the UK France and Germany; however, there almost 20% more expensive than in the Netherlands. Lyons suggests that it would’ve been helpful for the report to dig a little deeper into the figures and findings, concluding that “Housing Agency report gives us a lot more heat than light“.

Proptech

Given the story above about how home buyers are repelled by our current system of bidding, now might be a good time to point out that alternatives exist. Most estate agents and investors are aware of the bidding technology of BidX1 (formerly Allsop) in an auction context, however, what they might not be aware of is that there are several Irish companies making similar technology-driven solutions available right now. The team at I-AmSold developed similar technology and are making it available to Irish estate agents for use in auction situations. Also, proptech innovators at Beagel.io designed a world-class solution with buyers in mind, that is affordable and readily available to independent estate agents in the Irish market.

*It is important to let both sellers and buyers know that there is an alternative to the traditional and somewhat distrusted system of bidding, they simply need to demand it.*

“The most impactful new technologies we have seen under proptech – which is a broad church – have come from outside the industry. Industry innovators tend to focus on improving existing business processes. The main threat to ignoring these types of changes is the firm losing competitive advantage. But consumer-driven innovation is an entirely different animal. This has the potential to disrupt not only how you do business, but whether you do business at all, as these disrupters have no respect for the status quo. This is the real threat to the industry.”

To keep up-to-date on all things tech and innovation for the planning, construction and property industries, head over to http://www.prop-tech.ie, the national resource website for innovators, investors and mentors or email news@proptech.ie .

Property Insiders Guide

As many of you might know, my annual property book The Irish Property Buyers’ Handbook (since 2011) has undergone a rebrand for 2018 and will now appear as part of The Property Insider series, published by Oak Tree Press, the first three titles are now published and available here.